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Sara Kareer CLHMS
Mississauga, ON
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Toll-Free: 1-866-279-6638
Work Phone: 905-277-0771
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New Construction - Homes and Condos


Buying a pre-construction or pre-sale is different than buying a resale home.

Buying a pre-construction means buying a house or condo before it's finished - sometimes even before construction has commenced. The Developer sells the inventory based on a model homes or floor plans.
You, as the purchaser, are essentially buying a promise. You put down your deposits (as stated in the Purchase Agreement) and the builder promises to deliver the home in the alloted time, usually a few years.

The Benefits of Pre-Construction Homes 

Warranty:  the warranty programs in Canada offer protection for new build homes, including things such as delays in occupancy and closing coverage, protection for your deposit, and the cost of repairs if there are issues in the construction of your home once you move in. 

Flexible Deposits and Down Payments;  although you tend to need more for a deposit or down payment for pre-construction, the payment is staggered. You have time to keep saving as there is a small amount paid up front, and then the rest is paid on a schedule that leads up to the final closing.

Better Choices:  you’ll have more choices when buying pre-construction compared to resale condos such as the floor of the unit and the location (i.e., a corner unit or a better view); or choosing the location of the lot (ravine, size of lot,

No Bidding Wars:  depending on where you’re shopping for your home, bidding wars can really knock up the price. When inventory is low, buyers are desperate, and the more attractive the home and neighbourhood, the more chance there is you could end up paying an inflated price for a resale home. When it comes to pre-construction, you’re looking at a set price. You’ll know exactly how much you’ll be paying. 

10-Day Cooling Off Period:  you have 10 days to “cool off” and reconsider your purchase. During this time, you can arrange for financing and also have a lawyer review the agreement. If you change your mind or find something in the agreement you don’t like, you can get your full deposit back and walk away.

Value:  while your home is being built, it is almost guaranteed to rise in value.

Designer Home:  you have the option of designing your home with plenty of upgrades available through the builder. You’ve not only got upgrades for things such as kitchen counters and flooring but can also often make structural upgrades including adjusting some floor plan options. Because you’re making all your decisions for changes during the building process, they can be more affordable than a reno or upgrade once you move in.
With help from Sara Kareer, you can make smart decisions that will increase the resale value of your home.

Lower Condo Fees:  when buying pre-construction condos, the condo fees are lower in new builds than resale condos. That is because everything is new, and the management has yet to see how much it costs to operate the building or property.


The Downside to Pre-construction Homes

Delays:  you should always go into pre-construction with a hint of pessimism. However, with delays, you can be looking at years, not weeks or months. In general, low-rise pre-construction homes tend to see fewer delays than high-rise condos. Researching developers will help you find a trusted company with a good reputation for customer satisfaction.

Higher Deposits:  while you do get the opportunity to stagger your deposit payments, you will be paying as much as 10 to 20 per cent overall, compared to a deposit of five per cent when signing a resale agreement. In most cases, you’re looking at a five-per-cent sales deposit up front, and then payments that can be set at four, nine and 18 months, depending on the developer or building schedule. 

Mortgage Challenges:  when buying a resale home, you’ll usually be making your purchase before your locked-in rate expires. However, this can prove to be a challenge for pre-construction homes if the home completion date is extended and passes your locked-in expiry date.

Occupancy Fees:  for a pre-construction condo, there is a registration process required before you can legally own your unit. Although you can move into your condo during this period, you’ll be charged a monthly “occupancy fee,” which does not go towards your mortgage. This monthly fee will include your condo fees, the interest portion of the balance owing on the purchase price, and a portion of your property taxes.

Increased Condo Fees:  although you’ll see lower condo costs going in, you have to prepare yourself to see an increase by as much as 10% to 20% within two years. That is because within two years, the cost of running the condo is realized and increases are always required. This has to be added into your monthly budget when determining if you can afford your new condo, or you might find yourself having trouble making ends meet.


Other Pre-construction Costs

Your pre-construction home also has additional fees including GST/HST. There are rebates available if the home is your primary residence depending on your province. If you intend to rent out your unit, you’ll be faced with some taxes that you won’t be too thrilled about. A good way to avoid these taxes is to live in your unit for a while before renting it out.

There are also closing costs that you don’t have when buying a resale home, such as charges for utility meter installations, fees to track your deposit payments, use of the electronic land registration system, and more.

These additional fees can add up to as much as three per cent on top of your purchase price.


Working with Sara Kareer and your lawyer will help you get a more realistic view of what further costs you’ll have to pay on your pre-construction home. Sara can also help you look at a variety of resale and pre-construction options so that you are certain to find your dream home.

 

Contact Sara Kareer to receive your Platinum and VVIP Access to new construction homes and condominiums throughout Toronto, Mississauga, Brampton, Oakville, Vaughan and beyond. 


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